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Tuesday, March 17, 2009

GSI Technology Is Synonymous With Profits

Today's slight increase in the market is what we expected for the entire month. Get a little gain, give a little of the gain back. While the folks at tech:stocker would have liked a little more strength in today's market up tick, small gains are still better than losses. We were also happy to see the management changes at Fannie Mae (FNM:NYSE) and Freddie Mac (FRE:NYSE). Hopefully this will give investors a little more confidence in the financial services industry as these giants try to steady themselves after their recent fall. Until the financial stocks like AIG (AIG:NYSE), Washington Mutual (WM:NYSE), and Merrill Lynch (MER:NYSE) prove they can return to their profitable ways, investors are going to show some restraint towards many companies in this industry.

Today's stock grabbing our attention, GSI Technology (GSIT:NASDAQ) shouldn't worry potential investors as it has many similar attributes of tech companies that we have recently discussed. Devoting any time discussing the spartan Web site, minimalist press releases, and perfunctory management team would only detract from what this company does extremely well: posting profits.

According to their latest earnings release, GSI is on a profit roll that many other tech companies can only dream about. For 19 consecutive quarters, GSI has delivered positive earnings. The last time they failed to deliver profits for their shareholders, Red Sox fans were cursing Aaron Boone and wondering if the curse of the Bambino would ever be broken.

As a manufacturer of SRAM, GSI is a one-trick pony. If SRAM were to be replaced by a better technology, GSI's profitability streak would come to screeching halt. We're not too worried about this in the immediate future as companies like Cisco Systems (CSCO:NASDAQ) are increasing their orders of GSI's SRAM. Because Cisco is one of our favorite picks in part because we think they will do well in the third and fourth quarter of this year unless the economy hits a brick wall. Even if that happens, we doubt it will affect their spending with GSI substantially.

Over the next 12 months, we expect GSI to climb to 5 giving investors a nice little profit as the company continues their profitable quarter streak.. As with any micro cap, we do recommend keeping a close eye on this investment but there's no need to add GSI to your iPhone along with the rest of your financial stocks.